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Study Resources (Accounting)

21) Farrell and Jimmy enter into a partnership agreement on May 1, 2015. Farrell contributes $50,000 and Jimmy contributes $150,000 as their capital contributions. They decide to share profits and losses in the ratio of their respective capital account balances. The net income for the year ended December 31, 2015.
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Learning Objective 10-7 1) An exchange transaction is said to have commercial substance if the future cash flows change as a result of the transaction. 2) Exchanges of plant assets that have commercial substance require any gain or loss on the transaction to be recognized. 3) In exchanges of plant assets with commercial.
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Learning Objective 11-2 1) Gross pay is the total amount of salary, wages, commissions, and bonuses earned by an employee during a pay period, after taxes or any other deductions. 2) The old age, survivors, and disability insurance portion of FICA taxes is imposed on all of an individual employee's earnings. 3) The.
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Learning Objective 12-2 1) The statement of partners' equity shows the changes in each partner's capital account for a specific period of time. 2) In a partnership balance sheet, the each partner's assets, liabilities, and equity will be shown separately. 3) The financial statements of a partnership are similar to the statements of.
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1) A corporation is a separate legal entity and is organized independently of its owners. 2) Stockholders of a corporation are not personally liable for the corporation's debt. 3) All classes and types of a corporation's stock carry the same degrees of risk for the shareholder. 4) Preferred stockholders receive a dividend preference.
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11) Which of the following statements is true of partnership? A) If the partners have no partnership agreement specifying how to divide profits and losses, then they share equally. B) It is legally required to share the profit and losses equally, irrespective of the partnership agreement. C) The stated ratio of profit sharing.
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Learning Objective 12-6 1) The process of going out of business by selling the entity's assets, paying its liabilities, and distributing any remaining cash to the owners based on their equity balances is known as liquidation. 2) While liquidating a partnership, the cash remaining after paying all liabilities is paid to the.
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Learning Objective 11-5 1) Investors use the times-interest-earned ratio to evaluate a business's ability to pay interest expense. 2) The times-interest-earned ratio is also called the short interest ratio. 3) A high interest-coverage ratio indicates a business's difficulty in paying interest expense. 4) The times-interest-earned ratio is calculated as: A) earnings before interest and tax.
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Learning Objective 12-1 1) A partnership is a business with two or more owners that is organized as a corporation. 2) The articles of partnership is a contract between partners that specifies such items as the name, location, and nature of the business; the name, capital contribution, and duties of each partner;.
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Learning Objective 10-3 1) Discarding of plant assets involves disposing of the asset for no cash. 2) When a business sells a plant asset for book value, a gain or loss should be recorded. 3) When a plant asset is discarded that is fully depreciated and has no residual value, the business will.
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11) In a limited liability partnership, each partner is not personally liable for the malpractice committed by another partner. 12) The income of a limited liability company cannot be taxed to the members as though they were partners. 13) An S corporation is a corporation with 100 or fewer stockholders that can.
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11) Simonsen, Paulson, and Richardson are partners in a firm with the following capital account balances: Simonsen $50,000 Paulson 160,000 Richardson 100,000 The profit-and-loss-sharing ratio among Simonsen, Paulson, and Richardson is 1:3:2, in the order given. Paulson is retiring from the partnership on December 31, 2013. Paulson's capital account is settled at book value. Journalize the cash.
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11) If a company uses the contra account, Accumulated Amortization, this account will typically be shown on the balance sheet. 12) Which of the following is an intangible asset? A) copyright B) building C) land D) equipment 13) Businesses are allowed to record goodwill: A) when they enjoy an outstanding reputation and loyalty with customers. B) if they.
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Learning Objective 11-1 1) Amounts owed for products or services, due within one year, are current liabilities. 2) Amounts owed for products or services purchased on account are accounts receivable. 3) Unearned revenues relating to a one-year service contract are current liabilities until they are earned. 4) Notes payable are considered long-term debts, usually.
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25) On November 1, 2015, Oster Company declared a dividend of $3.00 per share. Oster Company has 20,000 shares of common stock outstanding and no preferred stock. Which of the following is the journal entry needed to record the declaration of dividends? A) Debit Dividends Payable—Common $60,000 and credit Retained Earnings.
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Learning Objective 10-6 1) The asset turnover ratio measures the amount of net sales generated for each average dollar of total assets invested. 2) The asset turnover ratio is calculated by dividing cost of goods sold by average total assets. 3) Maple Company had net sales of $200,550 for the year ended December.
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5) If preferred stock is noncumulative, then the company needs to pay dividends that were passed in previous years. 6) A dividend's declaration date is the date the corporation records which stockholders get dividend checks. 7) No journal entry is made on the dividend declaration date. 8) When a company has issued both.
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Learning Objective 11-4 1) A contingent liability that has a remote possibility of becoming an actual loss is not included in a note to the financial statements. 2) A contingent liability that will probably become an actual liability, and can be reasonably estimated, must be recorded as an expense and a liability. 3).
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11) Which of the following is true of a partnership balance sheet? A) Unlike a corporation's balance sheet, it includes all information from its income statement. B) It excludes the depreciation expense. C) It reports a separate capital account for each partner. D) It details the interest expenses of the business. 12) Given below is.
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Learning Objective 10-4 1) Natural resource is an asset that comes from the earth and is consumed. 2) The process by which businesses spread the allocation of a natural resource's cost over its usage is known as depreciation. 3) The units-of-production method is used to compute the depletion expense. 4) Businesses should not deplete.
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21) Ragas Inc. sold goods worth $50,000 in the year 2013 and estimated 4% warranty expense for the year. Customers complained of defects and goods worth $1,500 had to be replaced. Which of the following is the correct the journal entry for honoring the warranties with goods? A) Estimated Warranty Payable 1,500            .
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11) Which of the following corporate characteristics is a disadvantage of a corporation? A) Stockholders of a corporation have limited liability. B) A corporation has a continuous life. C) There is no mutual agency among the stockholders and the corporation. D) Earnings of a corporation are taxed twice. 12) Outstanding stock refers to the: A) shares.
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55) On June 30, 2015, Roger Company showed the following data on the equity section of their balance sheet: Stockholders' equity Common stock, $1 par 190,000 shares authorized, 140,000 shares issued and outstanding $140,000 Paid-in capital in excess of par—Common 260,000 Retained earnings 940,000 Total stockholder's equity $1,340,000 On July 1, 2015, Roger declared and distributed a 5% stock dividend. The market.
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17) Lerner Company had the following transactions in 2015, its first year of operations. •  Issued 20,000 shares of common stock. Stock has par value of $1.00 per share and was issued at $14.00 per share. •  Issued 1,000 shares of $100 par value preferred stock. Shares were issued at par. •  Earned.
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Learning Objective 12-4 1) In partnership, a person can become a partner by purchasing an existing partner's interest. 2) The purchase of an existing partner's interest is not a personal transaction between the two individuals and is between the partnership and the new partner. 3) When a new partner enters into a partnership.
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11) Which of the following accounting principles requires that warranty expenses must be estimated and recognized in the same period as the related sales revenue is recognized? A) the matching principle B) the disclosure principle C) the revenue principle D) the consistency principle 12) Bison Company reported sales revenue for 2013 of $900,000. The products.
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21) In a partnership, mutual agency means that: A) the addition of a new partner does not dissolve the old partnership and mutually exchange the ownership with the exiting partner. B) every partner must bring the same amount of capital. C) the agency problem between the principal and agents are mutual and gets.
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Learning Objective 11-3 1) Warranties pose an accounting challenge because a company does not know which or how many products will have to be repaired. 2) The entry to accrue warranty payable includes a credit to Warranty Expense. 3) Estimated Warranty Payable would be included in the liability section of the balance sheet. 4).
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Learning Objective 12-5 1) Whenever a partner mix in a partnership changes, the old partnership ceases to exist and a new partnership begins. 2) The death of a partner dissolves the partnership. 3) When a partner withdraws his interest for cash, the liabilities in the balance sheet remains unchanged. 4) If a withdrawing partner.
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